Article by: ETO Markets
Gold prices remain elevated, trading near recent record highs above the $3,200 mark, following a period of strong gains underpinned by significant safe-haven demand. Persistent US-China trade tensions, highlighted by aggressive tariff hikes from both nations, are a primary driver bolstering gold's appeal as a safe haven. Furthermore, expectations for Federal Reserve interest rate cuts in 2025, coupled with a generally weaker US dollar and sustained purchasing by global central banks, provide strong underlying support. Significant inflows into gold-backed ETFs also underscore investor confidence. However, recent temporary exemptions on some US tariffs have slightly improved global risk appetite, potentially capping immediate gains. Additionally, the sheer height of the gold price might temper some physical demand from key consumers, and uncertainty surrounding the exact timing of Fed rate cuts persists. Market sentiment currently appears cautiously optimistic towards gold, with fundamental factors largely favouring continued strength, although the market remains sensitive to trade developments and upcoming central bank communications, particularly Fed Chair Powell's speech.
From a techinical perspective, gold (XAU/USD) is currently consolidating around $…, after pulling back slightly from its recent all-time high of $… recorded on April 14th. The primary resistance level is this recent peak near $…; a sustained break above this could signal a continuation of the strong uptrend, like triggering $…, with the upper Bollinger Band around $… also presenting immediate dynamic resistance. On the downside, the low from April 14th around $… offers the first significant support level. Below this, the rapidly rising 9-day Exponential Moving Average (EMA) at $… provides a closer dynamic support reference. A more substantial support zone resides near the 20-day Simple Moving Average (SMA), currently at $…, which aligns closely with the 21-day EMA at $…. While the MACD histogram ($14.75) shows positive momentum is still present, the high Stochastic reading (above 90) suggests the market may be overextended in the immediate term, potentially leading to further consolidation before the next leg higher. The high Average True Range (ATR) of $69.45 confirms the volatile trading environment.
